Associate Finance Professor
Beating the Pros Trading on Breaking News
Associate Professor Anna Scherbina has studied why even seemingly sophisticated mutual fund managers may irrationally hold onto losing stocks. Her recent research looks at price determination for luxury real estate, how news events impact stock prices and how the difference of opinion in financial markets effect asset returns.
Scherbina has presented her research at the world’s top business schools, including the London Business School, the University of Chicago Booth School of Business, Carnegie Mellon’s Tepper School of Business, Erasmus University, Harvard Business School and the Fuqua School of Business at Duke University. She has also presented her research to the Board of Governors of the Federal Reserve Bank, and to investment professionals at CalPERS and CalSTRS, the nation’s two largest public pension funds.
Research and News Highlights
In this op-ed, Scherbina shows how negative news on one company can cause other businesses to suffer as well, but with a delay—an insight that could help small investors reap significant trading profits, according to her research.
Be careful trading shares of Alibaba, warns Scherbina in her U.S.News blog. Her research shows that trading shares based on breaking news is a big mistake. By the time you have heard the news, chances are that the stock price has already fully adjusted to the new information.
Scherbina writes in an op-ed about why it’s best to be forward-looking when evaluating investment decisions and remember that the past is irrelevant. Her study of active mutual fund managers shows that even experienced investors are prone to hold onto losing stocks.